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SPYT: ETF Offering A 20% Yield From S&P 500 Option Spreads (NYSEARCA:SPYT)

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Money on the edge

Money on the edge

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SPYT Fast Facts

Defiance S&P 500 Target Income ETF (SPYT) is an actively managed options income ETF launched on 3/7/2024. SPYT has a distribution rate of 20% and a total expense ratio of 0.92%. Distributions are paid on a monthly basis. It is a small ETF, with $149 million in assets under management (“AUM”). Nonetheless, the average daily trading volume of $2.6 million is sufficient for long term investment and tactical allocation as well. The issuer Defiance ETFs is an asset management firm founded in 2018 with 80 ETFs in three categories: leveraged, income, and thematic funds.

Strategy

As described in the prospectus by Defiance ETFs, the fund primarily invests in an ETF tracking the S&P 500 Index, and sells daily credit call spreads on the Index.

A covered call strategy consists of investing in an asset and selling one or more call options on it for a premium. The fund’s call spread strategy adds a long call with a higher strike price for the same expiration date. Buying an additional call reduces the premium income, but also limits the risk of loss on the short call should the underlying asset price surge beyond expectations. Such a strategy enhances income with option premium, and also limits the gains from the underlying index.

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In SPYT, call spreads are rolled on a daily basis with near-term expiration. The fund may also gain synthetic exposure to the index by using call options.

The fund targets net premiums of 1.7% per month and an annual cash distribution of approximately 20%. There is no guarantee to reach the target, though. Distributions may include a significant part of return of capital (“ROC”). Distributions in excess of the fund’s earnings will reduce the net asset value, and therefore the dollar amount of future distributions. The portfolio turnover rate was 31% in the most recent fiscal year. I will use State Street SPDR S&P 500 ETF Trust (SPY) as a benchmark.

Portfolio

As an example from 6/5/2026, the fund has 99.9% of net asset value in iShares Core S&P 500 ETF (IVV), and two positions in S&P 500 Index calls (one short and one long) expiring the same day, with strike prices of 7584.31 (short) and 7599.48 (long). The index was at 7553.68 at the previous daily close, meaning the income-generating short call is 0.4% above the closing price, and the protective long call is 0.6% above the closing price. Options will have been rolled if you read this on a later date, and these percentages may change depending on market conditions.

Performance

SPYT has underperformed SPY by 4.1% annualized from 3/14/2024 to 6/5/2026, with slightly lower volatility and similar maximum drawdown.

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Total Return

Annual.Return

Drawdown

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Sharpe ratio

Volatility

SPYT

39.74%

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16.22%

-18.25%

0.98

11.46%

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SPY

51.07%

20.36%

-18.76%

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1.15

12.78%

Data: Portfolio123

Like for most, if not all, buy-write ETFs, the high yield doesn’t offset price underperformance. Excluding distributions, SPYT has lost 11.6% from inception to 6/5/2026, while SPY is up 47%.

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SPYT vs SPY price return

SPYT vs SPY price return (Seeking Alpha)

Monthly distributions have been on a slow downtrend following the share price, as plotted below.

SPYT distribution history

SPYT distribution history (Chart: author; data: Defiance ETFs)

Based on the fund’s 19a-1 notice for May 2026, the distribution of that month was 100% Return of Capital (“ROC”). High ROC may have a negative impact on a shareholder’s tax payment. For example, non-resident aliens (“NRA”) may be initially submitted to withholding tax, with an adjustment at year-end that is not always automatic, depending on the broker.

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Competitors

The next table compares characteristics of SPYT and four income ETFs based on daily rolled S&P 500 options:

  • ProShares S&P 500 High Income ETF (ISPY)
  • Roundhill S&P 500 0DTE Covered Call Strategy ETF (XDTE)
  • TappAlpha S&P 500 Growth & Daily Income ETF (TSPY)
  • Defiance S&P 500 Weekly Distribution ETF (WDTE)

This list is not intended to be exhaustive. In particular, ETFs with less then $50 million in AUM have been excluded. I have also added two non daily-rolled S&P 500 options income ETFs:

  • NEOS S&P 500® High Income ETF (SPYI)
  • Goldman Sachs S&P 500 Premium Income ETF (GPIX)

SPYT

ISPY

XDTE

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TSPY

WDTE

SPYI

GPIX

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Inception

03/04/2024

12/18/2023

03/06/2024

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08/14/2024

09/18/2023

08/29/2022

10/24/2023

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Expense Ratio

0.92%

0.56%

0.97%

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0.71%

1.03%

0.68%

0.29%

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AUM

$149.71 million

$1.30 billion

$334.44 million

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$291.64 million

$66.98 million

$10.10 billion

$4.34 billion

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Avg Daily Volume

$2.57 million

$5.55 million

$8.80 million

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$6.69 million

$638.86 thousand

$215.72 million

$43.80 million

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Dividend Frequency

Monthly

Monthly

Weekly

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Monthly

Weekly

Monthly

Monthly

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Yield TTM

20.65%

4.39%

33.07%

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13.71%

32.06%

11.60%

7.97%

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1Y Price Return

0.80%

20.10%

-8.49%

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10.09%

-9.51%

9.18%

15.65%

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Total Return*

29.01%

30.84%

29.61%

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33.49%

26.72%

31.97%

35.50%

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Annual.Return*

15.31%

16.22%

15.61%

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17.53%

14.16%

16.79%

18.52%

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Drawdown*

-18.25%

-16.88%

-19.09%

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-18.02%

-15.85%

-16.47%

-17.50%

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Sharpe ratio*

0.93

0.91

0.83

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0.96

0.85

1.19

1.18

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Volatility*

11.96%

12.56%

13.18%

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13.47%

12.16%

9.86%

11.39%

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* calculated with Portfolio123 from 8/21/2024 to match inception dates.

SPYT is ranked third in yield, sixth in total return between 8/21/24 and 6/5/26, and fourth in Sharpe ratio (a measure of risk-adjusted performance). Investors focused on yield may prefer WDTE or XDTE (with the inconvenient of higher volatility and faster price erosion), while risk-averse investors may choose SPYI or GPIX for total return, lower volatility and asset preservation.

Takeaway

Defiance S&P 500 Target Income ETF (SPYT) aims at a 20% yield with a daily options strategy on the S&P 500 Index. SPYT is best-suited for investors seeking a high and stable yield and accepting significant erosion in asset value, which may be offset by reinvesting a part of distributions.

  • Pro: High and stable yield, sufficient liquidity.
  • Cons: high expense ratio, high ROC, price erosion.

This article answers three main questions about SPYT:

  1. What criteria does SPYT have for its holdings selection?
  2. How does SPYT compare to similar ETFs?
  3. Which investors is SPYT suitable for?

Editor’s note: This article is intended to provide a general overview of the ETF for educational purposes only and, unlike other articles on Seeking Alpha, does not offer an investment opinion about the ETF.

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Manhattan Associates Stock Jumps 27% as Cloud Revenue Growth Powers Record Second-Quarter Results Today

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DoorDash Wins FAA Approval and Launches DoorDash Air, Its Own

Shares of Manhattan Associates surged 26.70% in Wednesday morning trading, climbing $44.90 to $213.07, after the supply chain software company reported record second-quarter results driven by strong growth in its cloud subscription business.

The Atlanta-based company reported second-quarter revenue of $297.8 million, up 9.3% from $272.4 million in the same period a year earlier and ahead of the consensus analyst estimate of roughly $293.7 million. Cloud subscription revenue, the segment investors have watched most closely as a signal of the company’s transition away from legacy licensing and services, climbed 26% year over year to $126.7 million. Services revenue came in at $133.0 million for the quarter.

On the earnings side, Manhattan Associates reported non-GAAP adjusted diluted earnings per share of $1.39, topping the analyst consensus estimate of $1.34 and improving from $1.31 reported in the second quarter of 2025. GAAP diluted earnings per share, however, declined to 85 cents from 93 cents a year earlier, with net income falling to $50.4 million from $56.8 million over the same period, a divergence that reflects differences between the company’s adjusted and unadjusted accounting measures.

The company’s remaining performance obligations, a metric that reflects contracted future revenue not yet recognized, grew 23% year over year to reach $2.5 billion as of June 30, according to the company’s earnings release. Manhattan Associates said the quarter marked its third consecutive period of record bookings, a trend executives described as reflecting sustained business momentum and effective execution of the company’s go-to-market strategy.

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Company leadership highlighted the growing role of artificial intelligence capabilities in driving the quarter’s results. Manhattan Associates said the introduction of AI-related features across its supply chain and omnichannel commerce platforms has become a meaningful differentiator in customer conversations, contributing directly to both deal activity and the company’s broader sales pipeline growth.

The company maintained an active share buyback program during the quarter, repurchasing 874,029 shares for a total of $125.0 million. Manhattan Associates ended the quarter with $186.1 million in cash and generated $90.7 million in cash flow from operations during the three-month period, according to its financial disclosures.

Manhattan Associates’ stock had already shown strength heading into the earnings report, rising 9.8% over the month prior to the release, alongside an average analyst price target of $185.45 compared with the stock’s pre-earnings price of $151.67. The magnitude of Wednesday’s rally, however, significantly exceeded the roughly 10% to 11% gains the stock initially posted in after-hours trading following the results, suggesting that additional buying interest developed as investors had more time to digest the details of the report and the strength of the underlying cloud growth trends.

Wednesday’s surge continues a broader pattern for Manhattan Associates, whose stock has repeatedly posted double-digit single-session gains following past quarterly reports when cloud revenue growth has exceeded expectations. The company posted a similar roughly 10% jump following its first-quarter 2025 results, when cloud revenue grew 21% year over year and the company subsequently raised its full-year guidance for that fiscal year.

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The company’s five-year historical sales growth rate stands at approximately 12.7% annually, according to recent analysis, though some market observers have noted that growth has moderated somewhat in more recent periods, with annualized revenue growth of roughly 6.3% over the trailing two years running below the longer five-year trend. Analysts have said that pattern reflects a broader dynamic within the enterprise software sector, where growth rates for even strong-performing companies have generally cooled from the elevated pace seen during and immediately following the pandemic-era surge in cloud software adoption.

Manhattan Associates provides supply chain management and omnichannel commerce software used by large retailers, logistics companies and other enterprises to manage complex inventory, fulfillment and distribution operations. The company has positioned its ongoing shift toward cloud-based subscription offerings as central to its long-term growth strategy, arguing that the recurring revenue model provides greater predictability and higher long-term customer value compared with the company’s legacy on-premises software licensing business.

Despite Wednesday’s sharp gain, the stock remains well below its most recent highs reached earlier in the year, having traded as much as 34% below those peak levels amid a period of broader volatility across software and technology stocks tied to shifting investor sentiment around enterprise software valuations and growth expectations more broadly.

Investors are likely to continue monitoring Manhattan Associates’ cloud revenue growth trajectory and the pace of its remaining performance obligations expansion in the coming quarters as key indicators of whether the company can sustain the kind of momentum reflected in Wednesday’s results, particularly as the broader enterprise software sector continues to navigate questions about the durability of growth rates following the initial post-pandemic acceleration in cloud adoption across the industry.

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